Category: Status

Robin Hanson’s ongoing discussion of positional goods, signaling, and consumption externalities at the new, exclusively Robin Hanson Overcoming Bias has been terrifically stimulating. I have a few thoughts about the relationship between externalities and “harm” that Robin’s discussion has stirred up.

Suppose you’re a Millian liberal devoted to the harm principle, which goes like this:

That principle is, that the sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.

Now suppose you, like many economists, are inclined to leap a bit hastily from “negative externality” to “harm.” And then suppose you, like Robert Frank, have a strong view about consumption externalities. When I buy a really expensive car, this story goes, it subtly shifts my community’s frame of reference for signals of social status and for judging the the adequacy or socially acceptability of certain vehicles. By diminishing the status signal sent by older and/or less expensive models, my choice exerts a subtle pressure for others to increase spending simply to maintain the constancy of the signal sent by their cars. If we decide to count this kind of effect as a “harm,” then sumptuary taxes pass Mill’s test and therefore do not count as paternalistic. We need not even torture the language and call regulation to reduce consumption externalities anything stupid like “libertarian paternalism,” since it’s not paternalism at all! Sure, the person facing a steep tax on luxury may be helped by a fiscal inducement to stay off the conspicuous consumption gerbil wheel, but that’s by the bye. The point is to prevent “harm” to others through individual consumption choices.

As Robin has been insistently pointing out, how good-looking we are, the quality of our mates, how smart and funny we are when we talk, and the impressiveness of our children’s achievements signals at least as strongly as our cars. If our investments in appearance, mate selection, Bourdieuian cultural capital, and children are not equally harmful, then why not? If you think regulating luxury consumption passes Millian muster, then why wouldn’t regulating extremely impressive feats of oratory or athleticism?

I think this line of thinking can be taken even further. Many so-called “culture wars” are largely about cultural externalities. Consider Linda Hirschman-like arguments to the effect that women who choose to stay at home raising children impose a significant cost on women who wish to pursue professional success by reinforcing traditional stereotypes of women’s relative strengths and by creating rational expectations among employers that firm-specific investments in female employees will have a lower than average expected payoff due to the possibility of maternity leaves or long-term exit from the labor market. The argument that stay-at-home moms ought to be stigmatized, or at least be extended decreasing levels of social esteem, is basically an argument for the cultural version of a tax on choices that have negative spillover effects for others. If the state took a side on this and actually did tax stay-at-home moms, would that pass Millian muster, on the grounds that mothering choices have spillover effects that “harm” other women?

I think that at this point Mill would suggest that something has gone dreadfully wrong. It looks like we’ve defined “harm” so loosely that the harm principle, so understood, could be the basis for the state regulation of any action whatsoever that affects anyone else in a way they don’t like.

Consider pecuniary externalities. If I open a hot dog stand across the street from your hot dog stand, I will take some of your business, or force you to cut your margins, and thereby make you poorer. Have I “harmed” you in some way that requires that you be made whole, or that suggests the wisdom of the state’s preventing future instances of such harm? The law says no, and the law is right. You have no right to local monopoly profits from hot dog sales. Indeed, pecuniary externalities are so valuable that there is a whole body of antitrust law ostensibly intended to promote them.

Now, when a black family moves into a neighborhood of white racists, thereby causing great unhappiness, or when the recognition of the legitimacy of gay marriages causes traditionalists to feel that their traditional marriages have been “devalued,” that’s the cultural analogue of a pecuniary externality. Somebody really is getting hurt in some real sense. But I don’t much care, and Robert Frank probably doesn’t either, if some racists are disgruntled by their neighbors’ color, or if some religious folk feel aggrieved by a perfectly accurate sense that the social esteem afforded their particular type of marriage has fallen in relative value.

Coasean logic focuses us on the duality of externalities. In the land of the deaf, there is no noise pollution. In the land of cosmopolitan enlightenment, there is no “there goes the neighborhood.” Progressive social change occurs through a revaluation of where to locate “the problem.” Is it in the signal or in the receiver? To identify a “harm,” and to invoke the harm principle, the moment there is a complaint, is the essence of reactionary politics. It is to shut down the very possibility of relocating “the problem” from the source of a reaction to the reaction itself. This would be the very opposite of the intention of Mill in On Liberty, which is at bottom a call for the cultural version of dynamic, ideally competitive markets roiling constantly with the hurt of lost market share.

Our opinions are part of this dominance/submission signaling system. The higher we feel in status the more we feel free to express distinctive opinions and expect others to agree, or at least not greatly disagree. Which is why we are so reluctant to agree with others we compete with, even when they make good points.

I eagerly admit that this is a good point. But! I don’t think everybody plays this game. There is an opinion elite heterodoxy game and there is a hoi polloi orthodoxy game. In some groups, contrariness is an effective strategy of marginalization, not elevation. But this is a game I’m sure Robin and I, in our different ways, are playing. I guess that’s one reason why I sort of pity people who are rigidly doctrinaire or partisan: it’s so intellectually submissive. Unless, of course, you pioneered the doctrine.

Over at TPMCafe Book Club, Internet guru Clay Shirky and tech policy wizard Tim Lee are discussing the old debate between Henry Farrell and me about the proliferation of status dimensions enabled by wealth and the development of new technology, and whether or not there is some kind of meta-ranking of status dimensions.

To Henry’s attempt at a sort of comic reductio in the example of a “level 75 Night Elf Rogue who Kicks Serious Ass!”, Clay responds:

Now this example is designed to be an absurd extreme, and Henry says as much, but even in its seemingly absurd form, I’m not on board with it. As I write this, Tiger Woods may be making some sort of golf history, burnishing further his already highly burnished reputation & c., and yet, given the choice, I’d much rather have dinner with the elf. I don’t care about golf, but I do care about Warcraft, and someone with that degree of expertise is a big deal in my book.

One obvious objection is that I am simply a pallid, pencil-necked geek who doesn’t understand the implicit meta-ranking of golf over WoW, but in fact, I am a pallid, pencil-necked geek who understands the implicit meta-ranking of golf over WoW perfectly well. The NY Times never puts serious Warcraft players on the front page of the sports section, much less the front page over all, so the general social importance of golf is hardly lost on me.

I simply don’t care. That most of my fellow citizens prefer golf to WoW doesn’t make me feel bad that I don’t, which I take to be Wilkinson’s point.

What I think lends Farrell’s claim of “implicit meta-rankings” some plausibility is the fact that, until recently, the national media provided something like a uniform yardstick for status. In 1970, whoever appeared on national television and in national magazines on a regular basis was a celebrity by definition. And because there were only three television networks and a dozen or so national magazines, the top end of the status hierarchy really was close to zero-sum. If you appeared on Johnny Carson, you displaced somebody else.

But as the Internet removes the artificial scarcity of soapboxes, it is becoming increasingly implausible to suggest that everyone’s fighting for a spot on a fixed national pecking order. Case in point: I just got back home from a road trip with my fiancée, and she brought along her iPod stocked with knitting podcasts. I wasn’t aware of it until recently, but there is, apparently, a vibrant online community devoted to swapping knitting tips, complete with its own blogs, forums, podcasts, and minor celebrities. I’m sure there were a few famous authors in 1970 who wrote about knitting, but the national conversation around knitting is incomparably larger and more participatory than it was in 1970. The rise of an online knitting subculture has created a whole new status hierarchy for knitting enthusiasts to compete over.

Later, in an IM, Tim pointed out that because knitting is “done mostly by women it’s harder to place on the male-dominated Night-Elf to Football quarterback spectrum that seems to be what people have in mind when they’re positing a monolithic pecking order.” I think that’s a great observation.